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Financial impact of spending additional money

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The Sunrise Hotel has 200 rooms. Each room rents at $110 per night and variable costs total $16 per room per night of occupancy. Fixed costs total $84,000 per month.If the hotel spends an additional $10,000 in the month on advertising they feel that they can expect an occupancy rate of 85% (assume current occupancy rate is 80%). What would be the financial impact of spending this additional money on advertising?

A Net income will increase by $16,320.
B Net income will increase by $26,320.
C Total fixed costs will remain the same.
D Total fixed costs will increase by $10,50

Reference no: EM131209538

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